The rental market has been exceptionally busy in recent years. There have been lots of headlines about the high demand for rental homes, and lots more people looking to move than there were homes available to rent.
But there is some good news. Despite the market remaining busy, the huge demand we’ve seen in recent years is starting to ease. There are more homes ( 7%) coming onto the market than there were at this time a year ago.
Our latest Rental Price Tracker shows that although average rents have hit a new record, rising to a national monthly average of £1,280, rental price growth is slowing. We’ve seen the lowest quarterly rise in three years, with rents increasing by £2 a month nationally, and by £4 in London ( 0.2%).
Our property expert, Tim Bannister, says: “The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that. We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of 5% outside of London, and 3% in the capital.”
Just how busy is the rental market at the moment?
We’re seeing a slight easing compared to the frenzied post-pandemic period, when we saw record-breaking demand, sharp price growth, and more of an imbalance between the number of people wanting to move, and homes available for rent.
At the end of 2023, we were seeing an average of 11 home-movers enquiring about every rental property for sale. And while this is a big jump from the pre-pandemic average of four enquiries per property, it’s considerably lower than a year ago, when we were seeing 14 enquiries made for every home listed for rent.
If you’re looking to move into a new rental home in 2024, you’re are likely to find a higher number of homes listed for rent, and a slightly quieter market, after demand eased during 2023.
Is rental price growth easing?
Average rents increased by 0.2% in the last three months of 2023. But this is a much smaller rise than the 3.8% jump we saw in the previous quarter.
We’re also seeing a higher proportion of properties reduced from their original asking price, with 23% of rental homes currently reduced, compared to 16% in the same period last year.
What are the experts seeing?
Estate agents are also seeing rental price growth easing recently.
Hayley Brinn, Director at The Total Letting Service says: “Prices appear to be levelling out now as more choice becomes available, with tenants becoming more price sensitive, or just reaching the maximum of what they can afford to pay. Some tenants are reluctant to move unless they have no choice, due to the risk of being charged higher rents elsewhere, while other tenants who may want to move are stuck due to their current rent being below market value, and the price gap to move to a larger house is out of their reach.”
Peter Lee, Director at Redbrik in Sheffield, says that in the current market, lettings agents can also help to keep landlords are up to date on the latest market trends and activity in their area so they can price accurately, and secure the best tenant for the long term, to make sure their property doesn’t sit untenanted.
What could happen in the rental market in 2024?
The early signs all point towards a more positive moving experience than in recent years for renters. 2024 looks to have a calmer outlook, with less of an imbalance between supply and demand, and reduced rental growth.
Although rental prices are slowing, rises of around 5% nationally are predicted for the year ahead, with a 3% increase in London.